Part 3: How Bitcoin Fixes Money with Lyn Alden - WBD705

Lyn Alden is a macroeconomist and investment strategist. This
interview is the final of three shows where we discuss Lyn’s
amazing new book: Broken Money. In this show, we recap the flaws
in the modern financial system, and then we discuss the potential
of Bitcoin as a decentralised solution with its ability to allow
hard asset money to move globally at speed.


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It is becoming increasingly clear, even to people without
expertise in monetary or fiscal matters, that the current
economic system is in need of urgent reform. The money supply
continues to inflate, rewarding large, well-connected entities at
the expense of smaller ones, with liabilities shifting from the
private to the public sector. At the state level, many countries
are facing serious challenges in accumulating capital and making
global payments. In short, money is broken.


At a more fundamental level, there are serious technical
limitations with current forms of money. Humans have been trying
to make gold and silver easier to use for thousands of years,
leading to the development of various banking tools. However, the
increasing level of abstraction in these tools has caused major
issues, especially with the rise of telecommunications. This has
led to the current system where physical money is too slow for
the modern global economy.


Bitcoin is a potential solution to all these issues. It is
different from previous monetary innovations as it allows hard
asset money to move globally at the speed of digital
communications, which could revolutionise the financial system.
It is unsurprising that it has emerged at the end of the
long-term debt cycle, as an innovation that unified various
technical concepts developed over previous decades, with the aim
of creating a form of money suitable for the digital age.


But perhaps more important than the technical aspects of Bitcoin
is the rigid and predictable monetary policy, which consists of
two simple rules: a fixed limit of 21 million coins and a halving
of the inflation rate every 210,000 blocks (approximately every
four years). Its decentralised nature protects this monetary
policy from being corrupted. This simplicity contrasts starkly
with the complex and convoluted monetary policies of central
banks and governments.


Bitcoin therefore offers a global, decentralised ledger that
allows for easy cross-border transactions and protects against
debasement. Whilst its advantages are more immediately obvious to
the people and governments in developing countries, Bitcoin’s
importance extends to all people and all countries. There are
always risks to Bitcoin that the community needs to be prepared
for, so it is vital to educate people about Bitcoin and its
long-term potential.


 


Show notes:
https://www.whatbitcoindid.com/podcast/how-bitcoin-fixes-money


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